Considering the Single-Payer System

This article examines implications of the proposed single-payer health care system on the practice of American dermatologists, leaving aside issues of political feasibility.

Sen Bernie Sanders (D-VT) recently unveiled the Medicare for All Act legislation that would move the United States to a single-payer health care system. He argues that such a system will improve patient care, reduce administrative bureaucracy, and allow physicians to devote more of their time to practicing medicine. Opponents of the legislation argue that it would lead to rationed care, lower reimbursements, and delayed access.

Substantial variety exists within single-payer systems (Table 1).1 The Medicare for All Act would gradually expand the age range under which individuals would qualify for Medicare, a government-provided health insurance currently available only to select populations such as the elderly. Eventually, this would transition the American health care system to one that resembles the Canadian model. In this system, all citizens qualify for government-funded health insurance, administered through a mix of public and private health care providers.

Although the passage of such a bill remains a virtual impossibility in the current political climate, its implications are worth examining given that single payer may eventually become part of the Democratic party platform.2 This article examines implications of a single-payer health care system on the practice of American dermatologists, leaving aside issues of political feasibility.

The Implications

First, many physicians are concerned about the possibility of substantially reduced reimbursement levels during a transition to a single-payer system. Although precise physician salary data changes are admittedly difficult to project, single-payer systems do not necessarily correlate with decreased physician salaries.

In 2007, the Congressional Research Service reported that the United States was ranked third in physician compensation after adjusting for purchasing power, behind the Netherlands and Australia (2 countries with single-payer health care systems).3 Physician salaries increased in Canada in the immediate aftermath of their single-payer system, likely due to increased health care utilization.4 The United States experienced a similar boom in physician salaries when Medicare was first implemented in the mid-1960s.4 Although physician incomes in both nations fluctuated briefly after the new legislation, salaries have steadily increased into the 21st century.4 While virtually all Canadian physicians continue to earn less than their American counterparts, this variation may be explained by a variety of factors, including greater public health spending in Canada resulting in decreased health care utilization.4

While salaries may remain relatively constant, physician take-home pay may be decreased in a single-payer system. The government will likely raise revenue for the insurance program through increased taxes on the highest income earners, which include physicians as well as other health care professionals.2 The arguments for various funding mechanisms for the single-payer system are outside the scope of this article.

Second, dermatologists may be hesitant to move toward a universal insurance plan because reimbursements would be fixed, likely at current Medicare rates.2 There is also a risk that the government would make coverage decisions based on cost-effectiveness rather than medical necessity. The trade-off in a single-payer system would be that physicians would not need to worry about multiple contracts, fee schedules, or obtaining prior approval for services. Instead, there would be a single set of standards and payment rates for covered services.1 A summary of some trade-offs is provided in Table 2.

Third, several categories of dermatologists may benefit from such a change. The first are those dermatologists who serve uninsured patients, or patients covered by Medicaid. Under the current system, these patients face several access barriers to health care, and wait significantly longer for dermatology appointments compared to privately-insured patients.5

Low-income patients are more likely to “no-show” compared to their privately-insured counterparts, thus costing dermatology practices significantly.6 However, an analysis of dermatology appointments in a single-payer system indicated that the no-show rate was significantly lower than the estimated rate in the American system.6 In addition, there are often significant disparities in the physician reimbursement from Medicaid compared to Medicare; in some states, Medicaid may reimburse as low as 38% of Medicare for the same services.7 Given that single-payer legislation would eliminate Medicaid, dermatologists serving low-income populations may enjoy a boost in health care utilization and associated reimbursements if Medicare covered all low-income patients. These changes may have the additional effect of incentivizing more dermatologists to practice in underserved areas, thus improving the current disparity in access to dermatologic care.

On the other hand, the dermatologists most likely to be negatively impacted by this change in reimbursement are those that serve a privately-insured population. Although many insurance providers will reimburse at rates similar to Medicare, some private insurances reimburse at higher rates.7 While these health providers may see initial reimbursement decreases from this change, these costs may be offset by other benefits such as decreased bureaucratic tasks from the substantially reduced role of private health insurance agencies and greater patient access. Decreased bureaucratic burden will likely have the unintended side effect of eliminating multiple mid-level insurance analytics jobs; the effects of this change on the broader economy are outside the scope of this analysis.

Dermatology practices providing a large proportion of cosmetic services may be largely unaffected by a transition to a single-payer system. Under the current system, Medicare does not cover most cosmetic services, and patients must pay for these services out-of-pocket. Patients would continue paying out-of-pocket for these elective services under the new legislation. It is likely that the single-payer system would cover even fewer cosmetic services in an effort to reduce costs. In addition, the presence of a single governmental body that determines coverage decisions means that challenging these decisions would involve direct governmental lobbying. The National Institute for Health and Care Excellence in the United Kingdom provides a paradigm for how such lobbying might work. The ethical and policy implications of these potential changes are vast and also outside the scope of this article.

The Medicare for All Act would implement a single-payer health care system that would affect various aspects of dermatologic practice. While overall physician salaries may be unaffected, physicians may face higher income taxes. Providing Medicare to all citizens will broaden access to care for underserved populations, and dermatologists serving these patients may enjoy improved patient show rates and perhaps higher reimbursements.

However, this expansion of coverage also carries a risk of moral hazard, where patients will be more likely to seek care for unnecessary services. While dermatologists serving mainly privately-insured patients may see reimbursement decreases, these costs may be offset by decreased bureaucratic tasks and increased health care demand. Finally, dermatologists providing cosmetic services may be largely unaffected, given that patients must pay out-of-pocket for these services.

Mr Hussain is a medical student at the University of Chicago, Pritzker School of Medicine and Harris School of Public Policy in Chicago, IL.

Dr Payette is with the department of dermatology at the University of Connecticut Health Center in Farmington, CT.

3. Rampell C. How much do doctors in other countries make? Economix Blog. https://economix.blogs.nytimes.com/2009/07/15/how-much-do-doctors-in-other-countries-make/. Published July 15, 2009. Accessed September 13, 2017.

4. Duffin J. The impact of single-payer health care on physician income in Canada, 1850-2005. Am J Public Health. 2011;101(7):1198-1208.

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